Why Trend Following Is a Good Investment Strategy | TCAF 137

On episode 137 of The Compound and Friends, Michael Batnick and Downtown Josh Brown are joined by Meb Faber, co-founder and Chief Investment Officer of Cambria Investment Management to discuss: hedging market risk, dividends vs buybacks, trend following, momentum stocks, international markets, the ETF landscape, and much more!
This episode is sponsored by AdvisorShares! Visit www.advisorshares.com/etfs/dwus/ to learn more!
More from Meb:
www.x.com/MebFaber
►00:00 - Cold Open
►13:07 - Intro
►13:37 - A Quantitative Approach to Tactical Asset Allocation
►25:57 - State of the markets
►32:52 - Dividends and Buybacks
►40:19 - Trend Following
►52:27 - Calpers
►58:11 - Private Equity
►01:04:09 - The Business of ETFs
►01:14:11 - Beer Tasting and CAPE ratios
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Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Josh Brown are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management.
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[@TheCompoundNews]

This episode is sponsored by AdvisorShares! Visit www.advisorshares.com/etfs/dwus/ to learn more!

[@aliasoma]

The phrase "salt of the earth" is an idiom that describes people who are very good, honest, and hardworking. They are not arrogant or pretentious, but rather genuine and reliable. They are admired and respected for being of great value to society. The phrase comes from the Bible, where Jesus calls his followers the "salt of the earth" (Matthew 5:13).

[@plusev7257]

Oh arrogant and pretentious, like Josh. Lol

[@3377ftw]

Irony that both hosts are Jewish? Lol

[@gregfoster2851]

Salt flavors and preserves - read the scriptures

[@rachelfintwit5813]

Feel like Midwest mensch was a great definition

[@aliasoma]

@@gregfoster2851 I literally copy/pasted the result of a google search. Take it up with religious people, lol.

[@TheBoosh]

The definition of salt of the earth is sitting across the table. Camo over a white collar, nice brim, calm demeanor AND bottomless market experience.. Meb is ready for anything.

[@SaraNisha-fw4uk]

Passive investments are trendy but often driven by momentum, and many folks don't get that part. They always seem like a sure thing but ultimately lead to over leverage and corrections. I don't believe in free lunch, I hedged my investments to reduce risk and bagged $945k.

[@DavidParker-sb9hp]

Nice job. how do you differentiate your strategy from luck

[@SaraNisha-fw4uk]

Ill give credit to my research leading to Emily ava milligan, a top fund manager, making this successful with $300k, not luck.

[@Joe900-px3nt]

I like important discussions. mine mirrors yours, I'm on track for a 205k return, thanks to my fund manager

[@MarjorieRyanJoy]

I copied and pasted her name into my browser and her website popped up immediately. I wish i had an example like yours to reference earlier. thanks for the share

[@DavidParker-sb9hp]

I had a session with her last week, and it was great. There are a limited number of free consultations available this month. Your share is appreciated

[@Yaw_Jr]

Salt of the earth means you're honest and down to earth

[@cashmonyz]

or hard working

[@daultongiesta4096]

Been waiting 3 years for Meb to make his debut, smacking the over that this episode is an all timer

[@simonsuddons5214]

From the UK here. Never missed a Compound and Friends. First thing I do with a coffee on a Saturday morning. Quality.

[@dezza00]

Based in Hong Kong and I do the same...i listen to the TCAF and other Compound podcasts on 2x speed while I go for hikes/walks and then rewatch on youtube if I really like the guests (Tom Lee, Tom Dwyer, JC Parets etc!)

[@Mantraflip]

Salt of earth- humble, genuine, high character

[@AndrewJoseph-wr8eu]

Investing in this economy is a hell at times for the average person that wants full control of their finances, Even investing in ETF stocks can be risky.

[@ericbergman7546]

The question to be asked at times is not if the government or the economy is responsible for the sudden dramatic shifts in the economy but if we are taking the necessary measures to avoid making losses no matter the situation even if the pay roll is not in your favor.

[@rodgertim2881]

One of the reasons i follow up these videos is to improve the returns of my investments and i can’t really say I’ve been seeing noticeable change though …. I’ll keep following to improve my investment philosophy anyway and find better ways to create smarter investments.

[@KeganGregory]

You’re talking about better ways?? I was at a seminar a few days ago where entrepreneurs gave their ideas on how to better improve investments to proper returns.

[@OwenFlex]

Get something to improve your profit margin in the long run

[@christopherherbert2407]

@@OwenFlexBuying Assets!!!

[@lagyungmin]

Glad you guys finally had Meb on the show. Learned so much from him over the years. Great episode.

[@CPaulBreezy]

Best thing about Meb is besides being extremely intelligent, he’s a great guy. He was out there mixing it up in the one on one breakouts at FP. Looking forward to catching up with Meb in Sept. 🏄🏻‍♂️

[@george6977]

Salt of the earth is defined as a person of great kindness, reliability or honesty. Josh, I value your honesty about the market; that's why I take note of what you say.

[@allenberman8742]

Meb is goat

[@mikerusso7095]

One of your best episodes between the Knights Templar and super psychology of the market insights. Way to go!!!

[@seanflynn781]

I love the cold opens 🤣

[@DREAMERS528]

Meb is brilliant, love how calm he is, great discussion. Definitely going to poke around and check out his funds

[@patosborne3924]

This has got to be one of my favorites ! A lot of good info.

[@lakewenatcheeproperties]

Meb is an A+ guest. Hella smart.

[@cliffpeebles9705]

What a thrill to have Mebane on! SYLD is one of my core holdings. Interesting discussion on CalPERS. I wish I was there for the beer tasting. I 'm a big fan of IPA, Double/Imperial IPA's. Ninkasi Brewing in Oregon has a triple IPA that in a blind tasting you would say is just a well balanced hearty west coast IPA. But don't do any trading after two of them.

[@ddduva4440]

“Salt of the Earth”--nice, kind, a good person. Someone people like.

[@kevinn6482]

Great show, great guest.

[@domesticateddad-mr6pk]

been watching your show for a month or two and i think you guys do a great job of financial knowledge, humor and mixing it up with your favorites at the end of all your tcaf shows, love your content and beer!!! keep killing it!!

[@no_goo]

Love Meb and his podcast.

[@Reutzel507]

Meb got me into investing

[@russellhenderson3980]

TCAF is the best and I wish it was on every day. When the show is almost over I experience the same bummer feeling I have near the end of a Curb episode.

[@aaronscottmatthews7883]

You're a pepper of the Earth kinda guy

[@cliffpeebles9705]

Perhaps more of an Italian seasoning kind of guy?

[@LuckyPunk13]

As always, great stuff! best financial podcast by miles.

[@DoughJones]

Josh is a pepper of the earth. He makes the US money management dumpster taste spicier, which is definitely at least not boring.

[@drewm6149]

“Salt of the earth” has always been described to me as the back bone of society/economy. People working the jobs that keep the “normal” parts of society moving. Your construction worker, factory worker, mechanic, landscaper, bus driver etc.

[@rickgraham7641]

Fear of the number 13 predates the Knights Templar by quite a bit. The guest was right, it's more linked with Judas and even Loki from Norse mythology.

[@mmm-cake]

Nice beer reviews 🤙🏼 love it mmm cheers

[@donnyrosart8714]

The full 'salt of the earth quote' from Matthew is a reminder to stay tasty.

[@iamhudsdent2759]

Salt of the earth means: A decent, genuine, reliable person without guile, pretense, cynicism, or affectation. Such people are commonly, but not necessarily, not from large cities but from small towns or rural areas of the world. My father would refer to his in-laws, my grandparents born in southwestern Ukraine, who had been farmers, as "salt of the earth", because of their humility, honesty, loyalty, and disarmingly uncomplicated ways.

[@gregfoster2851]

It pains me that no one knew “salt of the earth” is scriptural

[@milktop1]

Our leaders decided closing beaches and cardboard fans were the solution.

[@cliffpeebles9705]

Cardboard fans got in to less fights.

[@CliffG]

No favorites this week?

[@aliasoma]

Thursday's the new Friday.

[@savvyguy1353]

All of Meb’s funds are mediocre in performance vs a general trend following approach. That said he is a good listen. Most money managers are wildly smart but I don’t do anything with their funds

[@garyrogers6977]

At the end: equivalent to "I love you man!"

[@WhiteCarbon7]

Great conversation about the $100 "fee" at fidelity. I'm just a retail guy so it's great to understand how the meat is getting processed and how it affects the industry.

[@williamc4221]

Miller Lite for the win

[@irwinjones3960]

Salt of the Earth- Matthews 5:13

[@TheJamal46409]

Great info… better question… is that a New Era fitted?

[@davidwilson9976]

Meb is a malt of the earth kind of guy.

[@ssun1218]

Manhattan Beach!

[@biffgriffbuford]

More beer tasting please

[@doubleclick21]

I prefer dividends over buybacks because I prefer to be my own allocator of excess capital. I can buy more shares of the dividend issuing company or I can allocate the cash anywhere else in the market. I could tolerate buybacks (and more issuance) at valuation extremes, but CFOs have a pretty terrible track record.

[@DanABA]

Italian Pilsner is closer to a German pilsner, but it is dry hopped, usually with European hops.

[@tristenmolinet8850]

These guys are aware the buy back attacks are largely because of the bailout the airlines needed in the wake of the pandemic? Great episode by the way, Meb is a great guest and would love to see more of him.

[@garyrogers6977]

Not everyone can shine like you, Josh! Compassion.

[@itsarchi5968]

Petition to have Patrick Boyle on the podcast in the future.

[@Mantraflip]

Josh you’re wrong on salt of the earth

[@mmm-cake]

Do more beer reviews 😁 invite a guest that is a big guy that can handle a couple flights

[@LindaLovesLofts]

Oh yay! When Where LA? Okay links!

[@BitsOfInterest]

1:22:54 actually it's pronounced "duh style" 😂 (i+j makes a y in Dutch)

[@danbragg]

Does CalPERS have a fiduciary duty to their shareholders? If they do they’re completely violating it based on their charter? They are investing based on their initiatives and interests

[@nathansmith8187]

Whipsaw is the insurance premium you pay to avoid the big draw downs trend following saves you from. If you're going to follow the strategy you just have to accept that. If you can't then trend following isn't for you.

[@TheNoHandedBandit]

Salt of the earth is a phrase from the Bible ... People who are kind, helpful, people that make this earth not bland

[@joealtamuro]

When everything was shutdown, Fox Sports broadcast the real NASCAR drivers racing against each other on iRacing!!

[@GreenMonstahs]

Anyone catch the name of that South Korean semi company Faber mentioned?

[@Valencia-27]

Hanmi Semiconductor Co

[@nickschmidlkofer2297]

@@Valencia-27 where can i buy the stock?

[@bountyhunter8470]

I wonder what Meb thinks of the TSP from the federal government.

[@Ryan.G.Spalding]

Kirkland Silver Tequila. Best silver tequila at any price.

[@rachelfintwit5813]

Will never think of “salt of the earth” the same way again, kinda knowing that Josh invented Blues Traveler 😁

[@JessicaHengen-oc7xf]

Endorsing an etf that has 1.1% fee on two holdings- the qqq and the mtum? Am i missing something or is this a salt of the earth thing?

[@practicalfinance2596]

Salt of the earth people are the people you owe your way of life. They grow your food manuafacture your products

[@genzinvesting8405]

Not knowing you’re salt of the earth is very salt of the earth

[@snewogerg]

Funny, here in So Cal, in new housing developments, they don't have the number for 4 in the address. This is for the Chinese buyers who believe the number 4 is unlucky. 2024 and we're still superstitious.

[@MatthewMS.]

Lion 🦁 King NYC is great

[@Ryan.G.Spalding]

It’s actually shocking how good Japan does for being an island

[@jamessykes249]

Factoid: Buffalo had an MLB team play in their city for the first time since 1885 (the Buffalo Bisons 1879-1885) and the only "people" that could attend their games were cardboard cutouts. How Buffalo of a story is that?!

[@DeludedLabs007]

Now Kith!

[@ddduva4440]

👏🏼👏🏼👏🏼👏🏼👏🏼

[@tomtragesser]

what was the name of that south korean semiconductor company?

[@TheCompoundNews]

Hanmi

[@TheCompoundNews]

Manhi

[@rickhammel7907]

Charlie Murphy “habitual line stepper” via Chapelle Show, talking about Rick James

[@cliffpeebles9705]

That was the Rick James story. Funniest thing Chapelle ever did. Get your boots off my sofa!

[@cliffpeebles9705]

Just watched the episode where Charlie plays basketball against Prince. RIP Charlie Murphy.

[@Jonathan-gk6se]

Josh says dividends are double taxation, but so are workers incomes. First the company is taxed on making money and then workers are taxed on their income. Last i checked, dividend tax rates are lower than income tax rates, which is the crazy part.

[@patrickharrison9677]

Bidflation strikes the nation ⚡

[@ezyryder11]

Can you add Cathie Wood as another special guest in LA? And Tim Dillon?

[@jaredmlynczyk]

0:57 Salt of the Earth refers to a group of people who are living under the reign and rule of God. In God’s kingdom, these type of people live as Jesus would, representing the flavor and eternal quality of the new covenant. In short, it’s a person with the character of Christ.

[@pat-orl]

Yes, not Josh Brown 😂

[@pandabear8142]

I was born on Friday the 13

[@miketaye]

Can you guys host someone like Tyrone from the Bronx? Turn my music loud

[@jeffossola668]

No favorites this week. 😢

[@lvran28]

"you're like the magnesium of the earth" L M A O

[@GasMart623]

The number 13 may be associated with some famous but undesirable dinner guests. In Norse mythology, the god Loki was 13th to arrive at a feast in Valhalla, where he tricked another attendee into killing the god Baldur. In Christianity, Judas - the apostle who betrayed Jesus - was the 13th guest at the Last Supper.

[@sofigod2278]

SOFI

[@imovie111]

The origin of the term is what Jesus said to his pupils: “You are the salt of the earth, and if you lose its saltiness to the salt, how will it be returned to it? He will no longer succeed in anything, because if he throws it outside, it will be a trampling for the feet of the creatures”

[@jamessignorile7110]

Why do they call him Drawdown Josh Brown?

[@angcx6192]

This guy looks like Duncan's twin

[@TheCompoundNews]

Haha, apparently we went to NC high schools about 20 miles apart.

[@irmazandl]

Warren Buffet is “salt of the earth.”Honest, down to earth, not pretentious.

[@MatthewMS.]

Josh Brown is anything but mid haha also a funny guy

[@christophernash1846]

the 13th bad omen comes from Judas being the 13th person at the last supper . Jesus was also crucified on a Friday.

[@Mantraflip]

Beard & yankee incognito Meb

[@Brayness]

This was a very salt of the earth episode

[@lisaomay]

⁰😊

i know thats why are so many bald people in us

[@yyss486]

If Calpers doesn't support VC, who will be then? Comparing Calpers with Nevada pension fund is inappropriate, almost laughable since they are not on the same scale. This guy's fund is just 2.5B which is very small. facts: Nevada's GDP was $170.1 billion, California's GDP was $3.8 trillion Obviously Calpers will never invite him since his ability is not inline with their goals.

why americans use hats inside house so weird

[@sideler7057]

Quite often it's used to hide baldness. Michael for example. I had a woman comment that so many guys wear caps in online dating photos. Then I understood why. One's appearance changes dramatically once that cap is off.

[@doesthingswithcomputers]

When you salt the earth you want to ensure noone will ever grow crops again…

[@kodiakgriz2296]

Amazing the dichotomy of investment acumen and political delineation ignorance.... the inept reference to bidentate not executing made zero sense hombre..... these dudes all vote blue.. duplicitous idiocy of NE talking heads

[@no_goo]

Raawwwwr

[@GreenMonstahs]

Anyone catch the name of that South Korean semi company Faber mentioned?

[@TheCompoundNews]

Hanmi